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Old 06.24.2007
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Railroads profiting from high oil prices

Railroads profiting from high oil prices
6/24/07
Salt Lake Tribune, United States
Quote:
Nobody likes the rising price of oil better than U.S. railroads.
As the cost of crude soars to near $70 a barrel, rail is gaining a competitive edge after losing ground to trucks for half a century. Even as automotive plant closings and reduced U.S. housing construction have contributed to a 4.4 percent drop in train shipments this year, investors that include Warren Buffett and Carl Icahn are flocking to railroad shares, betting that higher oil prices, surging Asian imports and congested highways will boost long-term demand.
''Earnings and stocks could quadruple within five years, which makes the stocks a bargain today,'' said Snehal Amin, a partner in London-based TCI Fund Management LLP.
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Old 06.26.2007
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Originally Posted by Cybergal View Post
Railroads profiting from high oil prices
6/24/07
Salt Lake Tribune, United States
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Only one problem.....railroad infrastructure isnn't capable of handling much more than 14% of the freight moved across the US.
One disavantage truckers face over railroads though is; railroads have enjoyed an ever increasing share of the FUEL Tax Dollars (paid by truckers) in the form of Federal Subsidies for about 30 years now. It is time to put trucking on a levelplaying surface with railroads and stop giving railroads a free ride on the backs of hardworking truckdrivers.
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Old 06.26.2007
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The infrastructure isn't there.....yet

If the powers that be decide we're going to get more of our things via the rails, that is what will happen.

In the late 1920s, there was hardly any electricity in some parts of the rural south. Within 5 years or so, the TVA changed all that.

I think we can tell for sure if rails are gonna make a comeback by watching railroad equipment construction. If you suddenly see a lot of new cars and locomotive units out and about, the powers may have made the decision that rails are coming back.

I say "may" because even new equipment construction may not tell the tale. I think a LOT of train cars were built in the late 60s and early 70s. These may be at the end of their useful lives now, meaning new cars will be simply replacing those that already exist. Can we use locomotive construction alone as a guide? Maybe. Maybe not.

What we DO know is Berkshire has put a lot of money into railroads, and those guys are gonna demand a return on those investments. They'll get 'em, too. Buffet and Co are big boys who can turn certain economic screws in order to get a certain outcome. I predict the new TVA will be known by other acronyms, such as NS, UP, and BNSF.

As much as I hate to say it, high diesel prices are here to stay, meaning your truck may go the way of the do-do bird fairly soon. As the extinction wave starts, many companies will begin implementing mandatory-teaming and no-idling policies for solo drivers. This will keep some drivers' jobs alive for a little while. And as those drivers toss and turn in their roasting or freezing cabs, they'll be able to look out at the shiny, black Norfolk Southern locomotives, brand new off the line, rollling by making Warren & Co the big bucks.
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Last edited by Tip; 06.26.2007 at 04.55 AM.
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